Dreams. Money. Fame.
Entrepreneurship is a path to feelings of freedom!
Although people are quick to share advice about growing a brand new business, they're less likely to talk about the nuts and bolts.
Getting a tax i.d. number isn't as glamorous as becoming profitable, but it's even more important.
Stop acting like you don't need to balance your books, and read on to understand the nuts and bolts of building a brand new business.
In order to pull off that awesome viral video or crazy PR stunt, you’ll need these locked down:
1. Write a Business Plan
Writing a business plan isn’t just for undergraduates exploring a business degree—putting all your thoughts and plans on paper is essential to growth. Usually, these plans project a 3-5 year plan (it’s ok if it changes) to help you make decisions along the way while keeping your goals in mind.
Plus, writing a business plan helps you figure out if your idea is actually viable.
“I’ve written two business plans that uncovered insurmountable obstacles and made me realize my idea was completely impractical,” says Annabel Acton on Forbes. “It was a valuable pressure test that saved me time, energy, and money in the long run.”
Tips for writing a business plan:
Don’t write it in a vacuum. You need to share it with other people to see if you’re on the right track.
If your business doesn’t make sense on paper, it doesn’t make sense at all. Use this as an opportunity to see if your business is actually viable.
If you hate writing, hire a freelancer to get the words out for you. You can hold phone calls and meetings—a good writer can help you put your ideas on to paper.
If you have no idea what a real business plan looks like, check out Shopify’s sample plan.
2. Figure Out Where
When you talk to a potential date online, you think they’re your dreamboat, but when you meet them in person, conversation is awkward. Sound familiar?
It sounds crazy, but starting a business is the same way. You have an idea about how and where you’ll work, but will the reality be what you’re imagining?
One of the first things you need to do when setting up a business is figuring out where. And yes, this should be a carefully thought-out decision, not just a “I’ll work from my house because it’s super cheap” choice.
A few options:
Remote Team – you can work at home, and any team members you bring on can work from their homes. This set up requires some project management software and top notch communication, but overhead is minimal. Home-based businesses get tax deductions, too.
Co-working Spaces – you can get a membership or rent an office in a co-working space. This is an affordable way to escape your home and meet new people.
Standard Office Space – Standard office space gets a bad rap these days, simply because there are other options, but there’s a reason why it exists—it works.
3. Decide on Financing and Legal Structure
You just want to sell tea pots, so do you really have to worry about financing and legal structure?
You need money to survive, so financing should be built into your business plan: will you get a small business loan? Hit up a startup accelerator or VC? Beg mom for cash? Sell your house?
You’ll also have to create a detailed budget. How much will you spend each month on the odds and ends?
And it’s not just the money—it’s also the legal structure.
When you first start, it might make sense to register as a sole proprietor or partnership, but soon you may want to get incorporated (Inc.), become an S Corporation (pass info on to your stakeholders), or a Limited Liability Corporation (LLC).
All this stuff is nuts and bolts, but it’s important that you take care of it at the get-go. It’s easy to do at the beginning, but way harder to do later.
Some tips for finance and legal:
Hit up the SBA. They have tons of resources for people in your position.
Talk to a human. Get help from someone you know who’s been through the same process, even if that means hiring a lawyer or accountant.
4. Get Tax-Friendly
Taxes, shmaxes, amirite!?
Um, sorry, how ridiculous does that statement sound? You must get recognized by the federal and state governments in order for business to grow and flourish.
Certain states provide better deals for small businesses (New Hampshire is particularly good, while Maine is particularly bad). Deductions are available for “green” businesses, veteran and minority-owned businesses, among other things.
Decide where you’ll incorporate. Taxes change in each state, so if you’re on the fence about where you want to start a business, do your research.
Get a tax identification number (otherwise known as an Employer Identification Number or EIN) from the IRS.-Online)
Register for federal, state, and local taxes (yippee!). You can so do easily thanks to the SBA.
5. Know Your Rights
Did you know that small businesses led by a minority or a veteran get tax deductions? Did you know that you can get healthcare without paying a hefty chunk of your paycheck?
Believe it or not, Obamacare has allowed many people to start their own businesses. Ritika Puri, owner of Elate, a boutique content marketing agency, believes the program allowed her to make her side project her only project.
“[pullquote]The biggest lesson I’ve learned is to not let media pessimism or logistical headaches stand in my way[/pullquote],” says Ritika.
Regardless of your personal politics and whether you agree with what the government does, make sure you know your rights. Understanding what is available to you as a small business owner will always help.
How to get info:
Get a business lawyer who can walk you through the basics. They're pricey, but worth it.
Do your research. SBA.gov is the ultimate resource if you need to understand your rights.
6. Read Resources & Take Courses
You're not going to know how to build a business instantly, so read resources and take courses to get ahead.
Look at the local community college or check out Coursera and General Assembly. Consider taking courses outside your regular wheelhouse. For example, if you write code, check out a course on public speaking. If you're a community leader, take a course on business law.
And alongside coursework, read books! One of our favorites is Dan Ariely's Predictably Irrational. It's full of insights that will help you better understand your customers.
Ask your business friends for book recommendations. Read.
Subscribe to a number of business blogs offering advice.
Take a course-- check out Coursera, General Assembly, and local colleges.
Now that you know the nuts and bolts, it's time for the fun stuff -- selling! Lay down a foundation so that you can market what you've got without running into bumps along the way.
Your Turn: What nuts and bolts do you wish you'd taken care of when you started your business? What advice would you give to other entrepreneurs?